The announcement follows months of troubling signs for the Powder River Basin operator, which for a time avoided the economic difficulties of its competitors but had of late experienced growing financial challenges as the market for its product diminished. The company chose not to make a $1.8 million debt payment on March 15 and received additional extensions in April.

A new deadline to pay its debt was set for 11:59 p.m. Friday. Instead, the coal firm filed bankruptcy paperwork in federal court in Delaware hours before the deadline was set to expire.

“Over the past several months, Cloud Peak Energy has thoroughly evaluated strategic alternatives to address the challenging market conditions in our industry," Cloud Peak President Colin Marshall said in a statement. "We believe, at this time, that a sale process in Chapter 11 will provide the best opportunity to maximize value for Cloud Peak Energy.”

In its announcement, the company said its mining operations would continue as normal as it moves through the bankruptcy process.

Cloud Peak owns three Powder River Basin mines: the Antelope and Cordero Rojo in Wyoming and Spring Creek in Montana. It is Wyoming's third-largest coal producer, and its mines represent 20 percent of the state's coal miners in the Powder River Basin.

Spring Creek Mine is Montana’s largest coal operation, producing 13.7 million tons in 2018, according to the Montana Coal Council. And the mine’s production has been gradually increasing since 2016 when a coal glut in the Asia Pacific stalled Cloud Peak exports for several months.

Cloud Peak considers the Montana mine well positioned to ship coal through both the Westshore Terminal in British Columbia and the Great Lakes.

Less certain is the future of Cloud Peak’s Big Metal Project, a mining development with the Crow Tribe that looked positive in 2013 when the company struck an agreement with the Crow Tribe for the right to lease 1.4 billion tons of coal. Since that time, the Crow have received $12 million to develop Big Metal.

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After the 2013 agreement, Cloud Peak ran into trouble as plans for a coal export facility near Ferndale, Washington, were rejected by the U.S. Army Corps of Engineers. The Corps concluded in 2016 that the port violated the treaty fishing rights of the Lummi Nation.

Last June, the mining company paid the Crow Tribe $1.8 million to begin developing the Big Metal. Cloud Peak can defer development until 2035 if certain conditions are met.

Attempts to reach Crow Tribal officials Friday for reaction to the bankruptcy were unsuccessful.

Industry woes

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Westmoreland owns the massive Rosebud Mine, which supplies coal to Colstrip's power plant, as well as the Absaloka Mine, a major source of revenue and well-paying jobs for the Crow Tribe. It owns a third, smaller mine in Savage, near the North Dakota border.

Unlike the nation's other coal giants, Peabody Energy and Arch Coal, Cloud Peak avoided the bankruptcies and layoffs that followed the coal downturn in 2015 and 2016.

While those companies struggled, Cloud Peak enjoyed a reputation for making smart choices, focusing entirely on the Powder River Basin. When Peabody and Arch were struggling through bankruptcy in 2016, Cloud Peak turned a second-quarter profit.

But the company has been under increasing financial pressure over the last year as its debts accumulated and its profits per ton of coal plummeted. Demand for coal weakened, and Cloud Peak did not have the debt relief that Arch and Peabody received when those companies emerged from bankruptcy.

Last year, Cloud Peak began showing more signs of financial distress: a June announcement that it would consolidate its offices, an October decision to cut retiree benefits and a warning in December that it would be delisted from the New York Stock Exchange.

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